September 3, 2021

The Quorum Conundrum: “No Show” Tribbles

Earlier this summer, Lynn blogged about a company that had to adjourn its annual meeting due to the absence of a quorum. That company was Oragenics, and it reconvened its adjourned meeting on August 23rd. Believe it or not, the company had to adjourn it yet again. Here’s an excerpt from its press release:

Oragenics, Inc. (NYSE American: OGEN) Oragenics, Inc. (“Oragenics” or the “Company”) today announced the Company’s reconvened annual meeting of shareholders, on August 23, 2021 at 4:00 p.m. was adjourned due to a lack of quorum. The Company intends to seek approval for the proposals submitted to its shareholders at a new postponed annual meeting date when practicable. The new annual meeting date will be established by the Company and a new record date, will be set in conjunction therewith; the former record date of May 5, 2021, is no longer valid.

So now, the company will try for a third time to hold an annual meeting, although this time it gets to incur all of the costs associated with establishing a new record date, filing a new proxy statement and soliciting shareholders all over again. I don’t think it’s coincidental that Oragenics reportedly has only about 8% institutional ownership.

Earlier this year, proxy solicitors warned that the decision by TD Ameritrade and other brokerage firms to no longer exercise discretionary voting authority for their accounts would increase the hurdles that companies with large numbers of retail investors would face in obtaining a quorum. Oragenics is an extreme example of that, but even the mightiest of the meme stocks, AMC, abandoned a proposal to increase its authorized number of shares due to concerns about getting enough votes.

The basic problem is that, historically, retail shareholders haven’t voted unless companies solicited them like crazy. Some think that may change with the rise of millennial investors. But it’s fair to say that the jury’s still out on that, and if companies with a bunch of new retail investors want to make sure those shares are represented “in person or by proxy,” they better be prepared to spend some of the money they’ll no longer be giving to Robinhood. Otherwise, Oragenics-like quorum nightmares could become a lot more common.

John Jenkins